A Market Basket of discontent

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Arthur T. Demoulas was in his element at the Market Basket in Chelsea Sunday, showing off his beloved grocery store to a visitor. He gave no appearance of being a man in grave danger of being fired in a few days, by his own family no less.

He warmly greeted every member of the staff and seemed to know many of the customers too.

A loyal customer named Dave Arinella embraced Demoulas in one of the aisles. Arinella said he shops at Market Basket five times a week. “All the things you buy — cars, insurance, whatever — you get ripped off. Not here. I don’t want to see anything change here.”

Frankly, I thought the long-warring Demoulas clan had finally run out of stuff to go to war over, that they had devised a way to peacefully divide hundreds of millions of dollars. They haven’t.

The Market Basket chain was founded in 1963 and has long been one of the most successful regional grocery chains in the country. But the Demoulas family spent many years embroiled in one of the ugliest, most costly, and most bizarre court cases in memory.

I’ll spare you the details; all you really need to know is that by the time it was over, two of the lawyers on the case had been disbarred.

Now Arthur S. Demoulas is expected to try to have his cousin, Arthur T., removed as head of the chain at a board meeting this week. Arthur S.’s branch of the family is said to believe that the hugely successful chain could be the source of even more riches if only Arthur T. would stop being such a sap.

Though court documents indicate that Arthur S.’s family has received roughly $500 million in dividends over the past decade, it has sought as much as $1.5 billion more in payouts.

The protesting shareholders have been especially outraged by a profit-sharing plan that they believe has enriched rank-and-file employees at the expense of the family. Indeed, Arthur T. Demoulas proudly declares that some employees
retire with well over $1 million in their profit-sharing plans.

In one telling episode, one of the funds in which the profit-sharing money is invested suffered a $46 million quarterly loss during the 2008 financial meltdown. Arthur T. Demoulas says he insisted that the company immediately make up the loss to his employees’ accounts. That enraged his cousins, who maintained that no investment comes without risk.

Arthur T. Demoulas said in an interview that he didn’t want to be drawn into a public conflict with his relatives. He seemed sincere, but he is battling history: The Demoulas clan has been in a series of public battles off and on for two decades.

In recent years, relative peace has reigned. A court had awarded one branch of the family 51 percent of the company, with the other receiving 49 percent. The board of directors reflected that split.

Now that is all breaking down, with Arthur S. Demoulas moving to seize control from his cousin. Never mind that the Demoulas family member facing removal is the one whose side of the family actually works in the family business.

“This company has 25,000 employees working very harmoniously, who are happy,” Arthur T. Demoulas said. “Our customers are happy. Our vendors are happy. Then you have three or four shareholders who are unhappy.”

Arthur T. Demoulas said he would be the biggest beneficiary if the company were to slash its generosity to its employees and raise prices, as he says his cousins want. But he claimed he would be betraying the company’s values.

“I’m the single-largest shareholder in the company,” he said. “I stand to benefit the most in dollars and cents. But I don’t measure in dollars and cents.”

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